Apple didn’t increase iPhone pricing, but you’re still going to pay more.
It seems every year the rumors are finally going to come true, and Apple will raise the base price of the iPhone. With tariffs this time around, everyone was sure to see some sort of price increase. It was the perfect time to do it, but it was also a huge political gamble since increased pricing might have political backlash, and more talks of Trump and tariffs would put a sour taste between Tim Cook and Trump’s relationship.
Not only did we not get a price increase for the base iPhone 17, but we got a free storage upgrade from 128GB to 256GB for the same starting price of $799. That is absolutely wild, considering the screen and many other aspects of the phone are on par with the iPhone 17 Pro.
The iPhone 17 Pro did get a $100 price increase, but it also got a storage increase, making it the same price as last year. Technically this isn’t a price increase.
The iPhone Air did get a $999 price as I assumed, but that also is in line with the 16 Plus from last year at 256GB. Not to mention a new phone can’t really have a price increase year over year if it just debuted.
So, what is Apple doing to keep up revenue? They’re playing the pricing ladder game beyond hardware and are using services to increase revenue.
AppleCare+ used to be $199 for a Pro device without Theft and Loss for two years, but now a single year of AppleCare+ with Theft and Loss (the only option now) is $140 for a single year. That’s $40 extra in Apple’s pocket each year per iPhone. Similar trends are there for Apple Watch where it used to be $79 for two years without Theft and Loss, and now it’s $59 for one year with Theft and Loss. That’s another $20 each year in Apple’s pocket.
AppleCare One is also a new convenient way to add three devices on AppleCare+ for $19.99, further adding more customers at a more palatable price point that normally would not buy AppleCare+.
Let’s not forget AppleTV+ that went from $9.99 to $12.99 recently. Those few extra bucks are enough to push someone into an Apple One tier since the odds are high people are also paying for at least one other service, and for a few bucks, they can share the services with up to five other people. And Apple isn’t shy about mentioning it either:
In a statement, Apple said that Apple TV+ has expanded its deep library of originals since launch, and that Apple One is the “the easiest way to enjoy all of Apple’s subscription services in one plan at the best value.” As before, a single subscription can be shared with up to six people through Family Sharing.
These subtle pricing strategies in their Services category are leading the way with a linear curve in revenue compared to the seasonal peaks and troughs that they have with hardware sales. The margins on services are usually much higher than hardware, giving them that boost in profits that otherwise might be diminished by tariffs.